Zero Depreciation in Car Insurance

Zero Depreciation is an add-on car insurance coverage that negates the impact of depreciation on your car insurance policy. Usually, if your car gets damaged, the car insurance claim amount that you can receive accounts for the depreciation accumulated on the car due to age and usage.

However, with a Zero Depreciation Cover, you can receive the entire value of your car's components during a car insurance claim without any deductions for depreciation. Therefore, adding a Zero Depreciation Cover enhances the coverage of your car insurance plan and increases the financial protection for your vehicle.

In a Zero Depreciation Cover, Zero Depreciation means that there is no effect of depreciation on your car insurance plan. Therefore, buying Zero Depreciation Car Insurance is a beneficial decision. Out of the car insurance companies in India selling zero depreciation car insurance in India, Tata AIG is an excellent choice, particularly with our long history of high-quality customer service delivery.

Depreciation is the reduction in a car’s value over time due to factors such as age, usage, and wear and tear. As your car gets older, its value decreases. In car insurance, depreciation plays a role in the amount you can claim. When you file a claim, the insurer reduces the payout by the depreciation value of your car’s parts, meaning you receive less money for repairs or replacements.

The Insurance Regulatory and Development Authority of India (IRDAI) sets the standard depreciation rates for vehicles in India. These rates depend on the age of your car and are used by insurers to calculate how much depreciation to apply when determining the claim amount. This can result in a lower payout, especially for older cars.

Depreciation Rates for Car Components

The depreciation rate for other parts, including wooden parts, follows the schedule below:

Depreciation Based on Vehicle Age

Zero Depreciation Car Insurance helps reduce your additional costs by covering the full repair cost without any deductions for depreciation. Normally, when you make a claim, the insurance company deducts a percentage of the value of your car’s parts based on depreciation. This results in a lower payout. However, with Tata AIG’s Zero Depreciation Car Insurance, you only need to pay the standard deductible, and the rest of the repair cost is covered without any depreciation being subtracted.

Example: Claim Settlement With & Without Zero Depreciation

Without Zero Depreciation:

Bumper repair cost: Rs. 7,000

50% depreciation on plastic parts + Rs. 1,000 deductible

Claim amount: Rs. 2,500 (You pay Rs. 4,500)

With Zero Depreciation:

Bumper repair cost: Rs. 7,000

No depreciation deduction: only Rs. 1,000 deductible

Claim amount: Rs.6,000 (You pay Rs. 1,000)

Opting for zero depreciation car insurance maximises your claim payout and minimises personal expenses.

If you wish to have complete insurance coverage for your car, you must opt for zero depreciation car insurance. Whether you are a new car owner, a veteran car owner, or a sports car enthusiast, adding a zero depreciation cover to your car insurance plan can spare you from having to bear the burden of the depreciation of the car's parts, particularly in the form of a reduced car insurance claim payout.

Here is the list of people who should opt for Zero Depreciation Car Insurance.

• New Car Owners: If you have recently purchased a new car and are considering different car insurance policies for it, you must add a zero depreciation add-on cover to the plan you select. By doing so, you can get extensive insurance coverage for your car.

• Sports Car Owners: Owning a sports car comes with a fair amount of thrill and pride. However, since the prices of such cars are high, their components are costly too and often difficult to repair and/or replace. Therefore, it is advisable for sports car owners to buy zero depreciation car insurance.

• Luxury Car Owners: If you own a luxury car, the cost of repair of its components could leave your pockets considerably lighter, even with a good car insurance plan. This is why you must not think twice before opting for a zero depreciation cover for your luxury car.

Choosing Zero Depreciation Car Insurance means you’ll get higher claim payouts and pay less from your own pocket. Here are the main benefits of this add-on:

-Depreciation Reimbursement Full Claim Settlement: Tata AIG’s Zero Depreciation Car Insurance covers the amount of depreciation deducted on the value of parts replaced under the own damage claim. This means you won’t have to bear the cost of depreciation on replaced parts during a claim.

-**Claim Settlement without Depreciation Deduction Higher Insurance Claim Amount:**Unlike regular policies, where depreciation is deducted from the claim amount, this cover ensures that the depreciation on replaced parts is reimbursed, helping reduce your out-of-pocket expenses. Unlike regular policies, Zero Depreciation Car Insurance ensures your claim amount isn’t reduced due to depreciation, so you get more money for repairs.

-Comprehensive Coverage for Expensive Parts: This cover includes parts like fiberglass, rubber, plastic, bumpers, and glass, without considering their depreciated value.

-Lower Out-of-Pocket Expenses: Without depreciation deductions, you will pay less for repairs, making it more affordable for you.

-Ideal for New & Luxury Cars: It’s perfect for cars that are less than 3 years old, especially high-end models with expensive parts.

-Protection in Accident-Prone Areas: It’s especially useful for cars driven in busy areas or on poor roads, helping to reduce the cost of frequent repairs.

-Better Resale Value: By keeping your car in good condition, Zero Depreciation Car Insurance helps maintain a higher resale value when you decide to sell it.

-Affordable Add-On: Adding Zero Depreciation Car Insurance to your policy is affordable but offers great benefits.

When renewing your car insurance, consider adding Zero Depreciation to ensure you get the best protection for your vehicle.

The premium for Zero Depreciation Car Insurance is typically higher than regular car insurance but provides greater benefits when you need to make a claim. Several factors determine the cost of the premium:

• Age of the Car: Zero Depreciation Car Insurance is available for cars under 5 years old. As your car ages, its value decreases, which can increase the premium as the risk of damage rises.

• Make & Model: High-end or luxury cars usually have a higher premium due to the higher cost of parts and repairs. Expensive models often require more costly replacement parts, which increases the overall insurance cost.

• Location: If you live in an area prone to accidents, theft, or vandalism, your premium will likely be higher. High-traffic areas or regions with poor road conditions increase the chances of your car being damaged, leading to higher premiums.

• Claim History: If you have made multiple claims in the past, your Zero Depreciation Car Insurance premium may rise. Insurers view frequent claims as indicating higher risk, which results in higher premiums.

• Coverage Add-Ons: Adding extra coverage, such as protection against natural disasters or roadside assistance, can increase the overall premium. These add-ons offer additional protection but also raise the policy's cost.

While the premium for Zero Depreciation Car Insurance is higher, it offers significant advantages, including higher claim payouts and reduced out-of-pocket expenses in case of damage. This makes it a valuable investment, especially when renewing your car insurance online.

• Example:

If you have a 3-year-old luxury car, the replacement parts are more expensive, resulting in a higher Zero Depreciation premium than a 5-year-old standard car. Additionally, the premium may increase even further if you live in a high-traffic area with more accidents. However, when you make a claim, you will receive the full cost of repairs without any depreciation deductions, ensuring a higher payout and reducing your overall financial burden. This makes the higher premium worthwhile in the long run.

Rate of depreciation for all other parts including wooden parts is to be as per the following schedule:

Before opting for a zero depreciation cover for your car, you must keep certain important factors in mind.

• The age of your car: You can buy a zero depreciation cover for your car only if it is not older than five years. Therefore, if you have a car that is more than five years old, you cannot get zero depreciation car insurance for it.

• The cost of zero depreciation car insurance: Since a zero depreciation insurance cover adds to the layers of protection available to your car, it carries a certain additional cost. This cost, in turn, increases your total car insurance premium.

• The coverage of zero depreciation insurance: Zero Depreciation Car Insurance does not entail zero depreciation for all the car compo. Some parts are excluded from the coverage of this add-on, including the parts made from glass. Furthermore, the damage to some other car parts is not calculated by 100 per cent deduction of depreciation but certain specified percentages instead. Therefore, you must check the coverage of a zero depreciation cover before buying it.

• The limit on the number of claims: The Zero Depreciation cover reimburses the depreciation deducted on parts replaced under own damage claims. This benefit applies to up to two claims per policy year, according to your policy terms and conditions. It helps lower your expenses by covering the depreciation amount typically deducted during claim settlement. Please refer to your policy document for specific eligibility and limits.

While Zero Depreciation Car Insurance covers most repair costs, there are certain exclusions to be aware of:

Cars Older Than 5 Years– Zero Depreciation Car Insurance is only available for vehicles that are under 5 years old. Cars older than this are not eligible for this coverage.

Total Loss or Constructive Total Loss– If the car is completely damaged beyond repair, the claim is settled based on the car's IDV market value, not through the Zero Depreciation Car Insurance cover.

Driving Under the Influence– If the driver is under the influence of alcohol or drugs, the claim will be rejected as this violates the terms of the policy.

No Coverage for Certain Part– Zero Depreciation Car Insurance does not cover parts like tyres, tubes, and consumables (such as nuts, bolts, and lubricants) unless specifically mentioned in the policy.

Driving Without a Licence– If the driver does not have a valid licence, Zero Depreciation Insurance for Cars will not apply, and the claim will be denied.

Mechanical or Engine Breakdown– Regular wear and tear, engine failure, or mechanical defects are not covered under Zero Depreciation Car Insurance.

Compulsory Deductibles– While Zero Depreciation Car Insurance covers depreciation, it does not cover mandatory deductibles. These must be paid separately.

To fully understand the exclusions, it’s important to review the terms of your car insurance renewal online with the Zero Depreciation policy.

When searching for the best zero depreciation car insurance, purchasing a zero depreciation cover online offers a seamless process. Here’s how you can easily buy zero depreciation car insurance online:

Step 1: Navigate to the car insurance page on Tata AIG’s website.

Step 2: Enter your car details including the model, make and registration year.

Step 3: Select car insurance from the options, focusing on those offering a zero depreciation cover.

Step 4: Choose the desired zero depreciation add-on from the add-ons available.

Step 5: Complete the purchase by paying the final premium amount.

Step 6: Receive your zero depreciation car insurance policy documents via email.

The process of car insurance renewal online zero depreciation is just as straightforward as buying one. However, it is important to keep track of the renewal date to ensure a timely renewal. Here are the steps to follow for a car insurance renewal online:

Step 1: Navigate to the car insurance page on Tata AIG’s website.

Step 2: You will get a choice between new or renewal options.

Step 3: Select the renewal option.

Step 4: Enter all required details.

Step 7: Complete the purchase by paying the final premium amount.

Step 8: Receive an acknowledgement via email.

The claim settlement process with zero depreciation car insurance is hassle-free, ensuring maximum payout without deductions for depreciation.

• No Depreciation Deduction: Unlike standard policies, claims are settled without deducting depreciation on plastic, rubber, fiberglass, or wooden parts.

• Full Claim Amount: Zero Depreciation Car Insurance covers the depreciation deducted on replaced parts during claim settlement, helping reduce your repair costs and minimizing additional expenses.

• Quick & Efficient Process: Tata AIG assesses damages and processes claims without factoring in depreciation losses.

• Check Policy Limits: Few policies might limit the number of zero depreciation claims per year, so review your car insurance renewal online with zero depreciation for details.

This coverage ensures higher financial protection, especially for new car owners or those driving in high-risk areas.

Several factors have a bearing on your zero depreciation car insurance premium, including:

• How old your car is: The vehicle depreciation rate is directly proportional to the vehicle's age. This is why the age of your car has a significant bearing on the amount of depreciation accumulated on it, which, in turn, helps determine how much premium you need to shell out for your zero depreciation cover.

• What the make and model of your car are: The make and model of your car are instrumental in the determination of its Insured Declared Value. The higher the IDV of your car, the higher is your car insurance premium and the premium of your zero depreciation car insurance cover.

• Where you drive the car: The geographical location where you usually drive your car is an important factor in the calculation of your car insurance premium. If you live in a place with a low incidence of traffic, your car insurance premium and the premium for your zero depreciation cover are likely to be lower than for someone who lives in a high-traffic area.

There are several differences between a comprehensive car insurance plan and a zero depreciation car insurance cover. The table below offers a succinct summary of these differences.

By selecting our Comprehensive Car Insurance Policy and adding a Zero Depreciation Cover to it, you can secure extensive financial protection for your car.

If you are still on the fence about opting for a zero depreciation cover, the following reasons may convince you:

• It Provides Your Car With Higher Insurance Coverage: By choosing a zero depreciation cover, you can get a high degree of protection for your car. If you opt for a comprehensive car insurance policy, you can benefit from extensive coverage. However, the car insurance claim amount that you will get will have a deduction for depreciation. Therefore, you must compliment your comprehensive car insurance policy with a zero depreciation car insurance cover.

• It Nullifies The Effect Of Depreciation On Your Car Insurance Claim: If you select a zero depreciation or nil depreciation cover, you effectively nullify the effect of depreciation on your car insurance policy and claims. This way, you can claim the entire amount of the repair/replacement expenses for the damages caused to your car without any deductions for the accumulated depreciation.

• It Reduces Your Total Expenditure For Car Repairs: The cost of repairing or replacing the components of your car can be quite high. Since your car insurance partner will only provide the claim amount after accounting for depreciation, you may have to bear a substantial part of the expenses from your own pockets. Therefore, it is advisable to opt for zero depreciation car insurance.